Sold Down the Yangtze: Extended note for chapter 37

In Chapter 37 of my book Sold Down the Yangtze: Canada’s Lopsided Investment Deal With China, I said that I’d post on this blog an explanation of how the Conservatives appeared to use their majority on the House of Commons’ trade committee to block other witnesses from appearing at the committee’s hearing on the Canada- China FIPA. As a result, federal trade officials who did appear at the hearing were able to put misleading information on the record, without it being corrected by any independent experts.

The Conservatives declined to allow time to debate the FIPA in Parliament, and appeared to block a study or debate of the FIPA in the House of Commons’ trade committee, except for a short briefing by federal trade officials. Unlike the committee’s hearings on other trade and investment deals, it did not hear from independent experts about the FIPA.

This arrangement was hush-hush for reasons alluded to by the NDP and Liberal members of parliament on the trade committee; for the full testimony from which the excerpts below are drawn, see House of Commons, Standing Committee on International Trade, Evidence (16 and 18 October 2012).

For example, the following exchange occurred between the Liberal MP Wayne Easter and Conservative MP Rob Merrifield (who was the committee chair):

Hon. Wayne Easter: Yes, I know we’re short of time, but I will be moving my motion with respect to having government officials do a briefing before the committee on the Canada-China foreign investment promotion and protection agreement. Did I understand from your words that this would be in camera?

The Chair: Listen, we’re not going to argue this point, and I have talked to you before about it. Do you want to raise this right now? Let’s just get it out of the way.

And NDP MP Don Davies said at the committee:

There was a motion put before this committee to have the matter [of the FIPA] brought before this committee. I’m not at liberty to tell anybody what happened there, but suffice it to say that this issue is not on the business of this committee after the meeting we conducted.

I read these comments as describing as a situation in which the Conservative committee members apparently used their majority to limit the committee’s public consideration of the FIPA to a brief question-and-answer with federal trade officials only. In turn, the federal trade officials’ misleading statements about the FIPA could not be corrected by an expert who was independent of the government.

What was misleading in the federal trade officials’ statements to the committee? For example, trade official Ian Burney suggested misleadingly that the FIPA did not provide for market access:

this FIPA is not an instrument pertaining to market access in terms of investment. It’s not intended to open up sectors on either side that are currently not open – and we have ours, too. This is an agreement to basically protect investment, by and large, once it’s in the market.

In fact, the FIPA provides for non-reciprocal market access to Canada by Chinese investors, as is discussed in chapter 6 of my book. In the quote above, Burney avoided making an outright false claim, by using the words “intended”, “currently not open”, and “by and large”. On the other hand, he left out any mention of Canada’s key giveaway on market access.

Also, when asked what Canada gave up in the FIPA, Burney told the committee:

What have we given up? I would say very little. We’ve basically undertaken not to discriminate against Chinese investments once they’re undertaken and once they’re here in Canada, but that’s the policy framework we currently have – we don’t make it a practice to discriminate against foreign investors based on their nationality now….

This answer included another qualifier: “basically” . Even so, it strongly implied that the FIPA merely required Canada not to discriminate against Chinese investors. That’s wrong, as I explained in chapter 31 of my book.

Later in his testimony to the committee, Burney indirectly confirmed that this implied message about non-discrimination was wrong, by referring to FIPA obligations that do not depend on a finding of discrimination. For example, he said:

There is an obligation not to expropriate Canadian assets once they’re in the market and, if they are expropriated, to pay fair compensation promptly.

There are obligations that prevent restrictions on capital flows once the investment is in the market in China. There are performance requirement disciplines in the agreements.

However, Burney made this more accurate statement when asked how the deal would help Canadian investors. Thus, he spun the story to sing the FIPA’s praises.

If an independent expert had been able to testify to the committee, he or she could have corrected these inaccuracies and pointed out the trade officials’ evasive language.